02/24/2010

Gloves Come Off in Camulos Capital Dispute

A legal dispute between the founding partners of Camulos Capital is becoming increasingly ugly.

In court papers filed earlier this month, Camulos co-founders Richard Brennan and Richard Holahan allege that their former partner, William Seibold, cost the Stamford, Conn., firm millions of dollars in unnecessary expenditures before he left in 2007. Seibold turned a dozen European "fact-finding trips" into lavish vacations, attending the 2006 Olympics and purchasing expensive wines for his personal cellar, according to Brennan and Holahan. Along the way, they said, Seibold laid plans for a competing hedge fund.

Their allegations were in response to a lawsuit Seibold filed in December, in which he accused Brennan and Holahan of refusing to pay him $67 million of accumulated compensation, investment gains and equity in the firm. Seibold followed up the complaint by filing court papers on Christmas Eve attempting to seize the assets of Camulos and his former partners.

Brennan, Holahan and Seibold all worked together at Soros Fund Management before setting up Camulos in 2005. At the time Seibold left in June 2007, the firm had about $2 billion under management.

Seibold claims he was improperly forced out by his partners, then was rebuffed when he tried to collect his compensation and withdraw his investments. Brennan and Holahan say Seibold received $5 million in salary, bonuses and benefits before he quit the firm.

"The notion that there was any sort of impropriety or unlawful or illegal conduct is frivolous," said Camulos' attorney, Daniel Goldberg of Kasowitz Benson in New York. "Mr. Seibold is owed nothing as a departing partner. The agreement he signed makes that clear."

But Seibold's lawyer, James Masella of Blank Rome in New York, said the counterclaim filed by Camulos is without merit and will be rebutted in documents to be filed as early as this week. "Mr. Seibold's track record with investors is excellent," Masella said. "He's a stand-up guy. He has had success in building a client list because he makes money for people and he's honest."

In 2008, Seibold launched Noroton Event Driven Opportunity Master Fund with $50 million from the Man Group's fund-of-funds arm, RMF Investment Management. RMF had been Camulos' largest investor.

The Noroton vehicle, based in Darien, Conn., soon fell victim to the financial crisis. But Seibold returned "every dime" to investors, according to Masella. Seibold has no immediate plans, other than litigating his case against Camulos, Masella said.

Camulos, too, has struggled through the financial crisis, hit by sharp losses and heavy redemptions. The firm currently manages about $675 million via three funds. It also invests in leveraged loans and distressed securities.

CORRECTION (3/3/10): This article has been corrected. The original version misspelled the name of the law firm of Kasowitz Benson.

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